EDITOR'S NOTE: It’s obvious to just about anybody that the gold trade is on, fueled by the Russia-Ukraine war in addition to global inflation concerns. But what’s to happen once the conflict winds down? That’s the big “$2k an ounce” question. E.B Tucker, Director of Metalla Royalty presents his two cents on the matter in the Kitco interview below, and it’s likely to go against the grain of mainstream investment thought (the assumption is that gold prices would sink). Not so fast. First off, gold got hit harder than most other assets during the lead-up to Russia’s invasion. Gold will likely remain a volatile asset through the entirety of the war. Plus, gold isn’t the only play in town, and the alternative would be far from mainstream appeal. We’re talking about the carbon offset market and the taxes that will likely come about because of it. Sounds like a confusing environment? Read on to see where opportunity and risk converge in this unpredictable and chaotic economic environment.
Source: Kitco News
“In these tense times of the Russia-Ukraine war, investors should be looking at gold. This is the time to buy gold because the gold price is under assault. The volume is extremely high in the gold futures market,” E.B Tucker, Director of Metalla Royalty explained. “My prediction is that the gold market will be very volatile during this war. Once this is done, gold goes back over $2,000 an ounce.”
Tucker, who is also the Director of Carbon Neutral Royalty, spoke to David Lin, Anchor at Kitco News, about where to invest during a war and about carbon taxes. Carbon Neutral Royalty, which was just launched, is a carbon credit streaming and royalty company.
Tucker emphasized that investors need to reevaluate the assets they are buying. “I have tech stocks going down and a gigantic mortgage. I have to pay double the price to buy a watch. But looking at gold, as the tanks rolled in, gold got smashed down a hundred bucks. With huge volumes in the futures market gold flushed everyone out. That means gold is ready to go higher,” he said.
In terms of how equities will perform during a war, Tucker said. “Unfortunately, you need to speculate, because interest rates will keep going down. The Fed is never going to raise rates. I predicted that months ago,” he stated. “With this conflict going on, how can they raise rates?” Interest rates are going to go negative and inflation is at 9 or 10%. People do not understand that they are losing that 10% every year.”
Tucker discussed investing in carbon credits as a way to speculate during these volatile times. “My way to speculate is to buy 30 years of carbon credits that are going to be produced out of the best projects in the world. I think the price of carbon credits is going up like crazy,” Tucker stressed.
As part of the world’s transition to clean energy, most companies need to achieve net zero carbon emissions by 2050. But if those companies cannot reach that goal, they can buy the rights in public markets for carbon credits. “Companies have to go into the market, and find someone who has planted trees and grass,” Tucker explained. “They say you saved all this carbon, so let me buy the right to pollute from you. From here until 2030, it’s a gigantic worldwide push. It is creating an entirely new market.”
Tucker spoke about consumers in the future paying higher taxes on products that emit carbon. “If you drive a gas guzzler you will be in trouble over the next decade. It’s going to get harder and harder to keep that vehicle, the push will be to transition to electric vehicles,” he noted.
“Governments use taxes as a way to control society in the direction it wants. Behavior is incentivized with taxes. You will be taxed on carbon so government can control you. If you buy a product from one country, it will be taxed, versus buying from another country where there’s no carbon tax,” Tucker added.
In discussing Carbon Neutral Royalty, a new company that offers investors an opportunity to buy into the carbon offset market, Tucker revealed, “We’ve partnered around the world with carbon project developers that are doing things like planting mangroves, re-establishing sea grass areas around places like the U.K. These are things in the environment that pull carbon out of the air, capture them and hold them for many years. Once these projects are verified, we get credits, we get royalties. We can sell those on the markets.”
Tucker pointed out that timing is the key to making money in the carbon credit market. “Once it’s there, it’s too late. You can forget about it,” he said, “The big dogs will be in there. Blackstone will own all the credits, and you’re done. You have to see this before it happens.”
Tucker continued, “I don’t think this market will exist forever. The carbon offset market is a bridge to net zero. There will be a time in the future where it’s no longer acceptable to turn on the coal power plant and just buy some credits from someone who’s ecologically responsible.”
For more on where to invest during a war and about carbon taxes, please watch the full video above.
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